Newsy is digging into a little acronym that has an increasing impact on the world of business today: the NDA.
An NDA, short for a non-disclosure agreement, is a contract signed that prevents people from sharing secrets. It's most often used in workplaces, where companies limit employees from revealing sensitive information.
Anne Douds is the chair and associate professor at the Public Policy Program at Gettysburg College.
"They started as more of a tool in the business and in business industries. So if you think about when you might want to use an NDA or a nondisclosure agreement in the business world, say you're developing some really sensitive software or you're developing a new drug or some sort of engineering thing that you're going to invest a ton of money in. And you don't want anybody in your company to just be able to walk out of some of the inventions done and take that proprietary information with them," Douds said.
But in recent years, NDAs have come under scrutiny, as both companies and prominent individuals have used and enforced them in cases where people have alleged sexual misconduct.
NDAs played a prominent role in a big story from just days ago. World Wrestling Entertainment Chairman and CEO Vince McMahon announced his retirement after running the company for nearly 40 years. It came just weeks after the Wall Street Journal reported that WWE was internally investigating McMahon for allegedly using more than $12 million to get female employees to sign NDAs. Those employees had accused McMahon and other WWE executives of sexual misconduct and infidelity.
But it can be difficult for news like this to come out, especially if the stories aren't as high-profile.
And the consequences of breaking NDAs can be severe, as you can face lawsuits and the threat of having to pay damages.
In practice, that can make it a lot harder for survivors of sexual misconduct to speak out.
Andrea Johnson is the director of state policy at National Women's Law Center.
"They're drafted in such broad language that they could capture easily. A worker speaking up about harassment or discrimination in the workplace. And so workers have seen those and really fearful of speaking up about what they're experiencing, doing things as simple as talking to a colleague about harassment they've experienced because they need support or they want the employee, that colleague to know what's going on and be protected. They're not able to do that because of these NDAs and they're fearful of being subjected to a lawsuit and damages if they speak up," Johnson said.
In the case of movie executive Harvey Weinstein, one of the many allegations of sexual misconduct against him only came out because of a broken NDA.
Weinstein's assistant Zelda Perkins was bound by an NDA that came with a settlement of 125,000 British pounds. Her colleague Rowena Chiu had survived an alleged rape attempt by Weinstein and shared her story with Perkins the next day.
Weinstein reached a settlement with both of them that involved a payment and an NDA. We only heard about all this because Perkins broke the NDA nearly two decades later under the threat of a potential lawsuit, speaking to reporters covering Weinstein's misconduct.
Elon Musk, the world's richest man, is facing an allegation of sexual misconduct reportedly bound by an NDA. Insider reported in June that Musk's company SpaceX entered into an NDA paying a flight attendant who alleged that Musk exposed himself to her and touched her without her consent.
NDAs have even played a role in revealing potential misconduct by a President of the United States. Former President Donald Trump's companies and presidential campaigns have had to pay out over $1 million in legal fees for unsuccessfully trying to enforce NDAs after staffers went public about events that occurred while working on the former president's campaign.
While in office, President Trump faced a lawsuit from adult film actor Stormy Daniels, who sued to try to get out of an NDA she signed before the 2016 election to not share details of an affair she had with him. The suit was resolved when a court ruled the NDA wasn't enforceable.
But as NDAs play a bigger role in allegations of misconduct against both individuals and companies, there's a growing effort to limit the power of the agreements.
After the emergence of the #MeToo movement in 2017, 15 states passed laws restricting NDAs in instances of sexual harassment and assault.
There's an important legal distinction to note here. Most NDAs fall into two categories: there are pre-event NDAs, which govern things that have not yet happened and include things like the NDAs workers often sign as they start a job. And then there are post-event NDAs, which often relate to settlements when a worker alleges misconduct. Most of the legal reform efforts relate to limits on pre-event NDAs.
California amended its original law last year to ban all instances of current or former employers blocking their employees from publicly disclosing an allegation of sexual misconduct. Maine passed a similar law this year that takes effect August 8.
Washington state's law, which took effect in June, bans NDAs in a wide range of situations, including all forms of workplace discrimination and violations related to wages and hours worked.
"They fairly explicitly spell out pre dispute and post dispute what can and cannot be in there. Other states, though, like Hawaii, Tennessee, Virginia, I believe Maryland bears are pretty succinct, just a paragraph or two that say pre-employment NDAs are prohibited for sexual misconduct, sexual assault, sexual harassment. And then they note that those terms are defined elsewhere in their codes. Pretty much end of discussion. You can't do it," Douds said.
These laws are taking effect in states, but advocates are also pushing for more protections for whistleblowers at the federal level.
Earlier this July, a bipartisan group of representatives in congress called for passage of the speak-out act, which would block judicial enforcement of NDAs involving an allegation of illegal sexual harassment or assault that were signed before an incident occurred.
"This was happening in all walks of life. We heard from waitresses who had been pinched to get their tips. We heard from hotel maids who were having to carry beepers because to call for help when customers were attacking them. We heard from we even heard from a welder who was the only woman on the job who had just left because she could not take the harassment of her male workers any more," said Representative Lois Frankel, the bill's sponsor.
The law would follow up on legislation passed earlier this year that stopped workplaces from forcing arbitration in cases of sexual misconduct, a provision that often prevented employees from going to court about their cases.
If the speak out act also passes, it would limit judicial enforcement of NDAs.
"Between the forced law arbitration act, which is prohibiting forced arbitration and the speak out, which is going to prohibit what's called these nondisclosure agreements, this is the one two punch that's going to keep workplaces safer. Why is it going to keep workplaces safer? Because it's going to enable us to hold abusers accountable," Frankel said.
But there's a worry about whether the bill as it's currently written would block employers from issuing NDAs, or only limit enforcement in court. That could be a crucial difference, since limiting enforcement without banning NDAs outright could lead to companies still making workers sign NDAs but with the hope that they might not want or be able to sue.
"The opening language does talk about the value of prohibiting NDAs, pre-employment NDAs. But when you get down into what it says it's going to do, it says it's going to limit judicial enforcement of NDAs. A lot of people, most people walking around, don't have their lawyer on speed dial. They just don't need lawyers very often. So that in and of itself creates an imbalance, just that access to the law," Douds said.
But the hope from sponsors like Frankel is that this will still give more power to workers facing discrimination to share their stories publicly and seek justice.
"What this proposed law would do is make those agreements are invalid. They're not enforceable. And so it's like it didn't happen. If somebody is abused, sexually abused or assaulted, then the gag is off. They are free to talk to anyone they want about what happened. It's like whatever they signed... I would say it's like in what do you call it, invisible ink. It doesn't count," Frankel said.
Let's dig in on that legislation. Those bills have their roots in a high-profile push to reshape how workplaces handle sexual misconduct.
Both laws we've discussed have been pushed by the advocacy group Lift Our Voices. The group was formed by former Fox News employees who came forward with stories of discrimination at the network and sued the network's former head, Roger Ailes, alleging sexual misconduct.
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